Buying a home is one of the most significant financial moves you can make. And in 2024, financing the home purchase looks different than in years past. With shifting mortgage trends, rising downpayments, and a surge in all-cash buyers, it’s essential to understand the landscape before making a move. Let’s break it down.
Mortgage or Cash? How Buyers Are Paying for Homes in 2024
Not everyone pays for their home the same way. While financing remains the most common method, a growing percentage of buyers are opting for all-cash purchases. This year, 74% of buyers financed their home purchase, a notable decline from 80% last year. Among first-time buyers, 91% took out a mortgage, while only 69% of repeat buyers chose financing. This shift reflects an increase in cash buyers, who now make up 26% of all home purchases—the highest percentage on record.
For those who do finance their purchase, the median amount borrowed is slightly lower than in previous years. First-time buyers typically finance 91% of their home price, down from 92% last year. Repeat buyers, on the other hand, are borrowing less, financing 77% of their purchase price, down from 81%.
How Much Are Buyers Putting Down?
The size of the average downpayment has been rising. In 2024, the median downpayment across all buyers is 18% of the home’s price. First-time buyers are putting down an average of 9%, the highest since 1997, while repeat buyers are making downpayments of 23%, the highest since 2003. With higher home prices and stricter lending requirements, buyers are prioritizing larger downpayments to secure better mortgage terms.
Where Are Buyers Getting Their Downpayments?
For many, saving for a downpayment is the biggest hurdle to homeownership. In 2024, 49% of buyers used their savings to fund their downpayment, a drop from 54% last year. First-time buyers rely heavily on personal savings, with 69% using their own funds. Additionally, 25% of first-time buyers received a gift or loan from a friend or relative to help with their downpayment.
Choosing the Right Mortgage in 2024
When it comes to financing the home purchase in 2024, most buyers are locking in fixed-rate mortgages. Sixty-four percent of all buyers chose a fixed-rate loan, with first-time buyers favoring them even more at 77%. Among repeat buyers, 60% opted for fixed-rate mortgages.
The type of loan buyers are selecting also varies. Among first-time buyers, 52% used a conventional loan, while 29% secured an FHA loan. VA loans remain a reliable option for eligible buyers, with 9% of first-time buyers using one. Notably, the percentage of first-time buyers using FHA loans has been steadily declining—from 55% in 2009 to just 29% in 2024.
Is Buying a Home Still a Good Investment?
Despite rising interest rates and home prices, buyers still see real estate as a smart financial decision. A strong 79% of buyers believe that purchasing a home is a good investment, with 39% saying it’s even better than owning stocks. With property values continuing to appreciate, homeownership remains a key strategy for building long-term wealth.
Final Thoughts
Financing the home purchase in 2024 requires strategic planning. With larger downpayments, changing mortgage trends, and a rise in all-cash buyers, it’s more important than ever to be informed. Whether you’re a first-time buyer navigating loan options or a repeat buyer deciding whether to finance or pay cash, understanding the latest market trends will help you make the right choice.
If you’re considering buying a home this year, connect with a real estate professional to explore your best financing options and secure the home that fits your needs and budget.
